Townsend Group invests Rs 400 crore in KKR’s India NBFC

NEW DELHI: New York City-based global buyout firm KKR’s Indian non-banking financial company, which provides structured credit solutions to the real estate sector, has raised $60 million (about Rs 400 crore) from The Townsend Group, a US-based firm focused on real estate, through fresh issue of equity shares.

After this round of fundraising, the NBFC will have an equity base of $220 million or about Rs 1,500 crore.

“This additional long-term capital allows the real estate NBFC to better fulfil a critical market need by assisting developers with solutions best suited to their needs,” said Sanjay Nayar, CEO of KKR India.

“KKR continues the strategic buildout of its real estate financing platform, leveraging its local and global real estate expertise in structuring and underwriting real estate solutions,” he said.

In January, the NBFC had raised about $110 million from GIC, Singapore’s sovereign wealth fund. In addition to these two leading investors, KKR invested $25 million in the NBFC, which raised another $25 million from one of the leading family offices in India.

“Townsend is excited to invest alongside GIC in the KKR managed real estate lending platform. The strong secular demand for middle market housing requires innovative credit solutions and long-term capital,” said Prashant Tewari, principal of The Townsend Group. Tewari further said, “Townsend believes this to be a unique investment opportunity, within select emerging markets, that seeks to benefit from the lack of longterm capital and strong urbanisation trends. The NBFC will engage in senior secured lending to the fast-growing Indian real estate market.”

The NBFC is KKR’s second lending arm in India. The first one, engaged in conventional lending business, was started with an equity capital base of about Rs 1,500 crore. Since 2009, KKR has extended more than $2 billion of structured financing to 21 business groups in India through its credit and capital markets business.

The NBFC provides credit solutions to property developers, filling the capital gap and contributing to the continued development of India’s residential and commercial real estate sectors. Over the past one year it has built a portfolio of five companies in which it has taken a combined exposure of about Rs 1,000 crore.

The Cleveland-based Townsend Group is a leading provider of global investment management solutions focused on real estate, infrastructure, timber and agriculture. As of December 31, 2014, it had assets under management of approximately $12.5 billion and provided advisory services to clients who had real estate or real asset allocations in excess of $170 billion.

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The unused Input Tax Credit (ITC) on goods and services lying with the property developers as on March 31 will be reversed for under-construction properties since the ITC stands to lapse from April 1 for such houses.